UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
INFORMATION STATEMENT
Pursuant to Section 14(f) of the Securities Exchange Act of 1934
and Rule 14f-1 thereunder
GRACE DEVELOPMENT, INC.
(Exact name of registrant as specified in its charter)
Colorado
(State or other jurisdiction of incorporation or organization)
0-25582
(Commission File Number)
84-1110469
(I.R.S. Employer Identification No.)
2685 South Dayton Way, Unit 42, Denver, CO 80231
(Address of principal executive offices, including zip code)
(303) 337-5700
(Registrant's telephone number,
including area code)
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GRACE DEVELOPMENT, INC.
INFORMATION STATEMENT PURSUANT TO SECTION 14(f)
OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 14f-1 THEREUNDER
NO VOTE OR OTHER ACTION OF THE COMPANY'S SHAREHOLDERS
IS REQURED IN CONNECTION WITH THIS INFORMATION STATEMENT
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
Introduction
This Information Statement (the "Information Statement") is being mailed
on or about September 7, 1999 to the holders of record at the close of business
on August 27, 1999 of the common stock, no par value per share (the "Common
Stock"), of Grace Development, Inc., a Colorado corporation (the "Company"), in
connection with (i) the merger (the "Merger") of a wholly-owned subsidiary of
the Company with and into New Millennium Multimedia, Inc., a Georgia corporation
("NM"), pursuant to which the shareholders of New Millennium will receive an
aggregate of 53,029,371 shares of the Company's Common Stock, representing
approximately 87% of the Common Stock to be outstanding immediately following
the consummation of the Merger, and (ii) the election of certain persons to the
Board of Directors of the Company other than at a meeting of the Company's
shareholders, with such persons constituting a majority of the members thereof.
No action is required by the shareholders of the Company in connection with the
election of such persons. Nevertheless, you are urged to read this Information
Statement carefully.
The Board of Directors of the Company has approved the Merger. No action
is required by the shareholders of the Company in connection with the Merger.
This Information Statement is being distributed pursuant to the
requirements of Section 14(f) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and Rule 14f-1 thereunder.
Information Relating to the Company's Common Stock
The shares of Common Stock are the only class of voting securities of the
Company outstanding. The holder of each share of Common Stock is entitled to one
vote per share on all matters submitted to a vote of the shareholders. As of
August 27, 1999 there were 7,599,962 shares of Common Stock outstanding.
Change of Control of the Company
On August 20, 1999, the Company entered into an Agreement and Plan of
Merger (the Merger Agreement") providing for the Merger. Pursuant to the terms
of the Merger Agreement, each shareholder of NM will receive 66.3013 shares of
Common Stock in exchange for each
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share of the common stock, $1.00 par value of NM (the "NM Common Stock"). As a
result of the Merger, the NM shareholders will own an aggregate of 53,029,371
shares of Common Stock (the "Merger Consideration"), which will constitute
approximately 87% of the shares of the Company's Common Stock issued and
outstanding immediately following the consummation of the Merger. Pursuant to
the terms of the Merger Agreement, the Board of Directors of the Company will
elect five persons designated by NM to the Company's Board of Directors (the "NM
Designees").
The Merger Agreement was attached as an exhibit to the Company's Current
Report on Form 8-K dated August 20, 1999 (the "Form 8-K Report"), which was
filed with the Securities and Exchange Commission (the "SEC" or the
"Commission"). For further information concerning the Merger, reference is made
to the Form 8-K Report. The description in this Information Statement of the
Merger Agreement and its terms and conditions is qualified in its entirety by
reference to the Form 8-K Report and to the Merger Agreement and such
description is not, and does not purport to be, complete.
Directors and Executive Officers of the Company
Current Management
The executive officers, directors and key employees of the Company, their
ages and present positions with the Company are as follows:
Name Age Position
---- --- --------
Jacob Barrocas 49 President, Treasurer, Secretary and
Sole Director
Jacob Barrocas. Mr. Barrocas currently serves as the President, Treasurer,
Secretary and sole Director of the Company since December 1, 1997. His
background includes consulting to private and public companies, as applicable on
the structuring of "going public" transactions, mergers, acquisitions, locating
and working with industry, professionals and consultants, and similar advice. He
has provided such service to numerous companies in the capacity of an individual
consultant for over the past five years.
Directors hold office until the next annual meeting of the shareholders
and until their successors have been duly elected and qualify. Executive
officers are elected by and serve at the discretion of the Board of Directors.
Management Following the Merger
Upon consummation of the Merger, Mr. Barrocas will resign as President,
Treasurer and Secretary, but will remain a member of the Board of Directors. The
Company's Board of Directors will increase the size of the Board of Directors to
six, and then each of the NM Designees will be elected by the Company's Board of
Directors to serve until the next annual meeting of the shareholders and until
each such person's successor has been duly elected and
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qualified. The name, age and present principal occupation or employment, and
material occupations, positions, offices or employments for the past five years,
of each of the NM Designees is set forth below. Each of the NM Designees has
consented to serve as a director of the Company if so elected:
Louis Friedman (age 47). Mr. Friedman co-owned and operated Chemtronic, Inc., a
maker of chemical specialties used in the production and repair of consumer and
industrial electronic equipment, until its sale to Morgan Crucible in 1990.
Since 1990, Mr. Friedman has been the principal of a family business that makes
private equity and venture capital investments.
Richard L. Granville (age 30). Mr. Granville is Chairman, Chief Executive
Officer and a member of the Board of Directors of NM and will become Chairman
and Chief Executive Officer of the Company following the Merger. He has held his
present position since August, 1998. From January, 1998 until August, 1998, he
was Senior Vice President - Sales & Marketing of The Personal Solutions Group,
Inc., an electronic security system provider. Previously, he was Director of
Sales and Marketing at Entergy Corporation, a provider of premises security and
communications services, from February, 1997 until January, 1998 and was General
Sales Manger at Rollins, Inc. from August, 1994 until February, 1997.
Ronald L. McCallum (age 47). Mr. McCallum is Chief Financial Officer of NM and
will become Chief Financial Officer and Secretary of the Company. Mr. McCallum
joined NM in February, 1999. Mr. McCallum was Vice President - Accounting &
Finance at HomeBanc Mortgage Corporation, a residential mortgage lender from
1995 until he joined NM. From 1986 to 1995, he was Controller of Tambone
Corporation, a real estate development company.
Dr. Lee H. Silverstein (age 39). Dr. Silverstein is a practicing periodontic
surgeon, and has been President and Chief Executive Officer of Kennestone
Periodontics, P.C., a periodontic surgical practice, and its related entities,
Kennestone Periodontics of Windy Hill, P.C., Kennestone Periodontics of
Vinnings, P.C. and Kennestone Periodontics of Marietta, P.C., since 1991. Dr.
Silverstein is also President of Kennestone Interactive, Inc., an educational
center and recording studio engaged in commercial ventures, Kennestone, LLC, a
real estate holding company, and Kennestone Periodontics, L.P., a holding
company that purchases bulk supplies for Kennestone Periodontics, P.C. and
Kennestone, LLC. Dr. Silverstein is also a member of the Board of Directors of
Partners at Park Place LLC, a real estate holding company, and the Ben Massel
Dental Clinic.
Peter A. Tierney (age 39). Mr. Tierney has been President and Chief Operating
Officer of Millennium Optical Networks, Inc., a facilities-based competitive
local exchange carrier, since January, 1999. Prior to joining Millennium
Optical, he was a senior manager for telecommunications services for MCI
Telecommunications Corporation from 1990 to 1995 and held tele-communication
sales positions with Time Warner Communications from June, 1995 to September,
1998, when he left to form Millennium Optical.
Following the Merger, in addition to Messrs. Granville and McCallum, who
will also serve as directors of the Company, the following person will be
elected an executive officer of the Company:
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Sean T. Duffy (age 35). Mr. Duffy is Chief Sales and Marketing Officer of NM and
will become Chief Sales and Marketing Officer of the Company following the
Merger. Mr. Duffy joined NM in his present capacity in February, 1999. Since
1992 and prior to joining NM, he held sales and marketing positions with several
companies in the telecommunications industry, including Network Plus, LCI and
QWEST Communications Services, Inc.
NM has advised the Company that, to the best knowledge of NM, except as
described below, none of the NM Designees or proposed executive officers (i) is
currently a director of, or holds any position with, the Company, (ii) has a
familial relationship with any of the directors or executive officers of the
Company, (iii) beneficially owns any securities (or rights to acquire any
securities) of the Company, (iv) is a party adverse to the Company or any of its
subsidiaries in any legal proceeding or (v) has been involved in any
transactions with the Company or any of its directors, executive officers or
affiliates that are required to be disclosed pursuant to the rules and
regulations of the Commission: Mr. Friedman owns 1,000 shares of Common Stock
jointly with his spouse; Dr. Silverstein is the beneficial owner of 8,992 shares
of Common Stock, including 2,696 shares held by his minor child; and Mr. Tierney
is the beneficial owner of 128,000 shares of Common Stock. Pursuant to Rule
13d-3(d)(1)(i) promulgated under the Exchange Act, the NM Designees and the
proposed executive officers, by virtue of their beneficial ownership of NM
Common Stock, may be deemed to have beneficial ownership of the shares of the
Company's Common Stock. See "Security Ownership of Certain Beneficial Owners and
Management Following the Merger" on page 6 hereof.
Pending Litigation
No director, officer, affiliate or person known to the Company to be the
record or beneficial owner of in excess of 5% of the Company's Common Stock, or
any person known to the Company to be an associate of any of the foregoing is a
party adverse to the Company or has a material interest adverse to the Company
in any material pending legal proceedings.
Board Meetings and Committees
Board of Directors Meetings
No meetings of the Board of Directors of the Company were held during the
fiscal year ended December 31, 1998. From time to time during the year, the
Board of Directors acted by written consent in lieu of meeting.
Board Committees
The Board of Directors has no standing committees.
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Compensation Committee Interlocks and Insider Participation
On the date hereof, no interlocking relationship exists between any member
of the Company's Board of Directors and any member of the board of directors or
compensation committee of any other company, nor has any such interlocking
relationship existed in the past.
Director and Executive Compensation
The Company does not pay any compensation to its Directors. The sole
executive officer of the Company serves without compensation at this time and
has received no compensation during the last three fiscal years. No employment
agreement exists with such officer and, except as described in "Certain
Relationships and Related Transactions" on page 8 hereof, there are no stock
options, warrants, rights or similar plans or arrangements or bonus or profit
sharing plans with respect to the officers of the Company.
Security Ownership of Certain
Current Beneficial Owners and Management
The following table sets forth information concerning ownership of Common
Stock outstanding as of August 27, 1999 by (i) each person known by the Company
to be the beneficial owner of more than 5% of Common Stock, (ii) the sole
director of the Company, (iii) the sole executive officer of the Company and
(iv) all executive officers and directors of the Company as a group. The Company
has been advised that the shareholder listed below holds sole voting and
investment power over its shares:
Name and Address of Amount of Shares
Beneficial Owner Beneficially Owned Percent of Class*
---------------- ------------------ -----------------
Signal Compression, Inc. 4,995,000 65.72%
3507 North Central Avenue
Suite 406
Phoenix, Arizona 85012
Jacob Barrocas 0 0
2685 South Dayton Way
Unit #42
Denver, Colorado 80231
All Directors and Executive Officers
(one in number) as a Group 0 0
- ----------
* Based upon 7,599,962 outstanding as of August 27, 1999.
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Security Ownership of Certain Beneficial
Owners and Management Following the Merger
The following table sets forth information concerning ownership of Common
Stock following the Merger by (i) each person who the Company believes will be
the beneficial owner of more than 5% of Common Stock, (ii) the NM Designees and
the director of Company, (iii) the proposed executive officer of the Company and
(iv) all executive officers and directors of the Company as a group. Except as
indicated in the footnotes hereto, the listed shareholders hold sole voting and
investment power over their respective shares:
Number of Shares
Name and Address of Common Stock
of Beneficial Owner to be Owned after the Merger Percent of Class*
- ------------------- ---------------------------- -----------------
Jacob Barrocas 0 0
2685 South Dayton Way
Unit #42
Denver, Colorado 80231
Sean T. Duffy(1) 1,326,026 1.79%
Louis Friedman(1)(2) 1,105,911
1.49%
Richard L. Granville(1) 14,122,176 19.11%
Ronald L. McCallum(1) 1,326,026 1.79%
Lee Silverstein(1)(3) 3,765,689 4.99%
Peter Tierney(1)(4) 338,982 *
All proposed executive officers
and Directors as a Group (7
in number) 21,984,810 28.96%
M. Allen Weed(5) 11,138,618 15.07%
7395 Glenmora Way
Swanee, Georgia 30024
Signal Compression, Inc.(6) 4,995,000 6.76%
3507 North Central Avenue
Suite 406
Phoenix, Arizona 85012
- ----------
* Calculated assuming that 73,889,593 shares of Common Stock will be
outstanding following the consummation of the Merger, which assumes
the conversion of all 799,824 shares of NM Common Stock outstanding
as of August 27, 1999, plus conversion of warrants for 200,000
shares of NM Common Stock that NM has been informed will be
exercised prior to consummation of the Merger. For purposes hereof,
a person is deemed to be the beneficial owner of securities that can
be
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acquired by such person within 60 days from the date of determination,
upon the exercise of warrants or options or conversion of convertible
securities. Each beneficial owner's percentage ownership is determined by
assuming that any warrants, options or convertible securities that are
held by such person (but not those held by any other person) and which are
exercisable or convertible within 60 days from August 27, 1999, have been
exercised or converted. An asterisk(*) beside a shareholder's name in this
column indicates that such holdings constitute less than 1% of the
outstanding shares of Common Stock following the Merger.
(1) The address for these individuals is c/o New Millennium Multimedia,
Inc., 1690 Chantilly Drive, Atlanta, Georgia 30324
(2) Includes 1,000 shares of Common Stock held jointly with spouse and
assumes the conversion of warrants to purchase 6,665 shares of NM
Common Stock.
(3) Includes 8,992 shares of Common Stock beneficially owned by Dr.
Silverstein or his minor child and assumes the conversion of
warrants to purchase 22,661 shares of NM Common Stock.
(4) Includes 128,000 share of Common Stock beneficially owned by Mr.
Tierney and the conversion of warrants to purchase 1,333 shares of
NM Common Stock.
(5) Mr. Weed currently serves as a director of NM and is employed by NM
as a consultant. Following the Merger, Mr. Weed will resign as a
director of NM, but will remain as a consultant to NM and the
Company.
(6) Pursuant to the terms of the Merger Agreement, shares of Common
Stock held by Signal Compression, Inc. ("Signal") will be pledged to
secure the indemnity obligations of the Company to NM and the
shareholders of NM under the Merger Agreement.
Section 16 Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's directors and officers
and any persons who own more than ten percent of a registered class of the
Company's equity securities, to file with the Commission initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the Company. Such persons are required by Commission regulations
to furnish the Company with copies of all forms they file pursuant to Section
16(a). Signal and Mr. Barrocas have failed to file either a Form 3 or Form 5.
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Certain Relationships and Related Transactions
Pursuant to an agreement entered into with Signal in December, 1997, Mr.
Barrocas and two other entities (the "Venture Group"), agreed to undertake
efforts to increase the value of Signal's holdings in the Company by, inter
alia, finding a merger candidate for the Company. Pursuant to such agreement,
Mr. Barrocas became the sole director and executive officer of the Company, and
agreed to serve in such capacity for no compensation. Signal has agreed to
compensate the Venture Group by paying over to them all proceeds from the sale
of Common Stock held by Signal in excess of $.05 per share after payment of
$175,000.00 in obligations owed by Signal to third parties. Signal has agreed to
sell all of its Common Stock held by it consistent with (a) its obligations
pursuant to the Merger Agreement, (b) market conditions, (c) applicable laws and
regulations and (d) maximization of proceeds from such sale or sales. Mr.
Barrocas has informed the Company that he holds a 25% interest in the Venture
Group. The Venture Group has agreed to subordinate its rights under their
agreement with Signal to Signal's obligations pursuant to the Merger Agreement.
By Order of the Board of Directors
/s/ Jacob Barrocas
Jacob Barrocas
President, Treasurer and Secretary
Denver, Colorado
September 7, 1999
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